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Central Bank Of Barbados |
Created 28 Jul, 2016
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World Bank economist Alister Smith believes that public sectors in the region are too large.
Governments should create an environment that is open and conductive to doing business and then allow the private sector to drive growth. This was the assertion of World Bank economist Alister Smith when he delivered the keynote address on the first day of the Central Bank of Barbados’ 2016 Annual Review Seminar.
Speaking on the topic “Unlocking the Growth Potential of the Caribbean Region”, Smith, who is the World Bank’s Executive Director for Antigua and Barbuda, Bahamas, Barbados, Belize, Canada, Dominica, Grenada, Guyana, Ireland, Jamaica, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines, cast government in the role of facilitator rather than creator of economic growth, and outlined what he believes the public sector’s focus should be on: drafting effective laws and regulations; developing the appropriate infrastructure; and ensuring citizens are sufficiently trained and equipped for employment.
Smith is the third visiting luminary in recent times to seek to redefine the function of government. Dr. Peter Blair Henry, Dean of the Leonard N. Stern School of Business and Dr. Nicholas Brathwaite, the 2015 Sir Winston Scott Memorial Lecturer, both expressed similar views.
Going further than previous speakers, Smith opined that public sectors tended to be too large because they are often used as a way to create employment. Public sectors, he stated, needed to be trimmed to a size that is sustainable – one that does not continue to increase the deficit in the name of protecting jobs. He also suggested increased use of information and communication technologies (ICT) to improve productivity and even recommended that governments divest themselves of some state-owned enterprises and allow the private sector to assume responsibility for them. He cautioned, however, that the latter could be difficult because of the additional costs that governments often incur during the divestment process.
As he addressed the seminar participants, Smith outlined several areas of potential growth. Pointing to the region’s success in tourism, he encouraged diversification through the targeting of niche markets such as adventure, eco, health, business and cultural tourism.
He also highlighted renewable energy is another opportunity for the region, pointing to Jamaica’s recent investment in wind energy and to solar projects being undertaken in St. Kitts and Nevis and Barbados. According to Smith, increased reliance on renewable energy as opposed to imported fuel would not only lower the import bill, it would also reduce input costs in the tourism and manufacturing sectors.
During his presentation, Smith also acknowledged some of the challenges faced by small states, and the Caribbean region in particular, including vulnerability to shocks due to limited diversification, expensive intra-regional travel, and high debt, which results in limited fiscal space to invest in growth promoting infrastructure. He noted however, that there are also several areas where the region has competitive advantage: geographical proximity to and a common language with the United States; stable democracies and judicial systems and high levels of education; and openness to foreign direct investment.
The Annual Review Seminar’s keynote speaker concluded by saying that as the region sought new areas of growth, rather than focus on the constraints, it should ask itself why not?
The Annual Review Seminar is a four-day conference that is sponsored by the Central Bank of Barbados. The theme for the 2016 seminar is “Identifying and Capitalising on the Engines of Economic Prosperity in the Caribbean”.
2016-07-27
Governments Should Be Facilitators Not Drivers of Economic Growth.pdf (314.88 KB)